Determine your answer, then click the arrow to see the correct response.
What Is a "Leasehold Estate" in Real Estate?
A) Ownership of property without any time limit
B) A temporary right to occupy and use property
C) The right to sell property without restrictions
D) An obligation to maintain the property
Correct Answer: B) A temporary right to occupy and use property
Explanation: A leasehold estate is an interest in real property that allows a person or entity to occupy and use the property for a specified period, as outlined in a lease agreement.
What Does "Fixed-Rate Mortgage" Mean?
A) A mortgage where the interest rate stays the same throughout the term of the loan
B) A mortgage where the interest rate varies according to market conditions
C) A mortgage with no down payment required
D) A mortgage with a fixed monthly payment that changes yearly
Correct Answer: A) A mortgage where the interest rate stays the same throughout the term of the loan
Explanation: A fixed-rate mortgage is a type of home loan where the interest rate remains the same for the entire term of the loan, providing predictable monthly payments for the borrower.
What Does "Depreciation" Refer to in the Context of Real Estate?
A) The increase in property value over time
B) The decrease in property value over time due to wear and tear, age, or obsolescence
C) The interest paid on a mortgage
D) The taxes paid on a property
Correct Answer: B) The decrease in property value over time due to wear and tear, age, or obsolescence
Explanation: Depreciation in real estate is the loss of value of a property over time due to factors such as physical deterioration, age, or functional obsolescence.
What Does "MLS" Stand for in Real Estate, and What Is Its Purpose?
A) Mortgage Lending System; to facilitate home loans
B) Multiple Listing Service; to provide a comprehensive database of available properties
C) Municipal Land Survey; to record property boundaries
D) Market Lease Standard; to set rental prices
Correct Answer: B) Multiple Listing Service; to provide a comprehensive database of available properties
Explanation: MLS stands for Multiple Listing Service, a database used by real estate brokers to share information about properties for sale, making it easier for agents to find and market listings to potential buyers.
A Homeowner Has a Mortgage With a Principal Balance of $200,000 and an Annual Interest Rate of 5%. The Loan Term Is 30 Years. How Much Total Interest Will the Homeowner Pay Over the Life of the Loan?
A) $186,511.57
B) $189,500.45
C) $193,255.85
D) $198,674.52
Correct Answer: A) $186,511.57
Explanation: First, calculate the monthly mortgage payment (M) using the formula: M = P[r(1+r)^n] / [(1+r)^n – 1]. Here, P = $200,000, r = 0.05 / 12 = 0.004167, and n = 3012 = 360. M = 200,000[0.004167(1+0.004167)^360] / [(1+0.004167)^360 – 1] ≈ $1,073.64. The total amount paid over the life of the loan is $1,073.64 × 360 = $386,511.57. Subtracting the principal, the total interest paid is $386,511.57 – $200,000 = $186,511.57.
A Commercial Property Is Valued at $1,200,000. The Annual Net Operating Income (NOI) Is $96,000. What Is the Capitalization Rate (Cap Rate) for This Property?
A) 6%
B) 7%
C) 8%
D) 9%
Correct Answer: C) 8%
Explanation: The capitalization rate is calculated by dividing the annual net operating income (NOI) by the property value. Cap rate = $96,000 / $1,200,000 = 0.08 or 8%.
What Are the Obligations of a Landlord Regarding the Leasing of Real Property in North Dakota?
A) To provide rent-free accommodation
B) To ensure the property is habitable and to make necessary repairs
C) To grant tenants ownership rights after 5 years
D) To increase rent annually
Correct Answer: B) To ensure the property is habitable and to make necessary repairs
Explanation: Under North Dakota Century Code Title 47, Chapter 47-16, landlords have obligations to ensure that the leased property is habitable and to make necessary repairs to maintain it in that condition.
Which Entity Is Responsible For Overseeing Real Estate Licensing and Regulation in North Dakota?
A) The North Dakota Department of Commerce
B) The North Dakota Real Estate Commission
C) The North Dakota Housing Authority
D) The North Dakota Attorney General's Office
Correct Answer: B) The North Dakota Real Estate Commission
Explanation: The North Dakota Real Estate Commission is responsible for the licensing and regulation of real estate professionals within the state, as outlined in North Dakota Century Code Title 43.
A Property Is Sold for $500,000. The Seller Pays a 6% Commission to Their Real Estate Agent. How Much Does the Seller Receive After Paying the Commission?
A) $470,000
B) $472,000
C) $475,000
D) $480,000
Correct Answer: A) $470,000
Explanation: The commission paid to the real estate agent is 6% of $500,000, which is $30,000. Therefore, the amount the seller receives after paying the commission is $500,000 – $30,000 = $470,000.
What Must Be Included in the Transfer of Marketable Record Title in North Dakota?
A) A verbal agreement
B) An unbroken chain of title for at least 20 years
C) A family inheritance document
D) A notarized affidavit
Correct Answer: B) An unbroken chain of title for at least 20 years
Explanation: According to North Dakota Century Code Title 47, Chapter 47-19.1, a marketable record title is constituted by having an unbroken chain of title to any interest in real estate by the person and the person’s immediate or remote grantors under a deed of conveyance which has been recorded for a period of 20 years or longer.